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What is the mnemonic to remember the difference between Form ADV Part 2A and Part 2B?
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The mnemonic is 'B = Bodies,' which helps remember that Part 2B contains biographical information about representatives.
Are referral fees based on the size of the client's account permitted?
No, referral fees based on the size of the client's account are not permitted. Only fixed referral fees are allowed.
What is the role of investment advisor solicitors?
Investment advisor solicitors are firms that solicit clients on behalf of investment advisors. They usually affiliate with independent advising firms and must provide certain disclosures to clients.
What information is included in Form ADV Part 1?
Form ADV Part 1 contains general information about the firm, including principal addresses, form of business, type of business specialization, and information about officers, directors, and owners.
What is the purpose of Form ADV Part 2A?
Form ADV Part 2A provides general information such as fees and charges, and serves as the disclosure brochure for clients.
What kind of business information must be disclosed in Form ADV Part 1?
Information about the form of business (LLC, C-Corp, etc.), the type of business specialization (e.g., bond portfolios, estate planning), and details about officers, directors, and owners is required.
What is Form ADV, and why is it essential?
Form ADV is essential for both state and federal registration of investment advisors. It serves as both a registration document and a disclosure brochure and is divided into two parts: Part 1 and Part 2.
What must be done if a client is referred to an IA by a CPA or attorney?
If a client is referred to an IA by a CPA or attorney, permitted fixed referral fees can be paid, but fees based on the size of the client's account are not permitted.
What does Part 2B of Form ADV specifically detail?
Part 2B of Form ADV contains biographical information about the representatives.
What are the annual update requirements for federal advisors regarding Form ADV?
Federal advisors must re-send Form ADV annually within 120 days of the fiscal year-end if there are any material changes.
When must state advisors provide the disclosure brochure to clients?
State advisors must provide the disclosure brochure 48 hours before the contract date, or the client gets a 5-day rescission period (free look period).
What must be provided along with Form ADV Part 2 when soliciting clients?
Form ADV Part 2 must be provided along with the IA solicitor's brochure, and the client must sign both this and the advisor's brochure.
Do individuals working for solicitor firms need to register as IARs?
Yes, individuals working for solicitor firms must register as Investment Advisor Representatives (IARs).
What common issue is tested regarding the disclosure brochure on the Series 65 exam?
The timing for providing the form to clients, especially the differences between state and federal regulations, is a common issue.
Under what circumstances must a state advisor resubmit the Form ADV annually?
State advisors must resubmit the Form ADV annually only if there are material changes or upon client request.
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